The study investigated the effect of cost management on profitability of Small and Medium Enterprises (SMEs) in Butiiti Sub-County, Kyenjojo District, Uganda. A descriptive cross-sectional survey design was employed with a sample of 227 SME owners and managers. Data were collected using structured questionnaires and analyzed through correlation and regression techniques. Results indicated a significant positive effect of cost management on profitability (r=0.721, p<0.01). Regression analysis showed that cost management practices explained 52.0% of variance in profitability (R²=.520, F=81.467, p<.001). Cost planning (β=0.389, p<0.01), cost control (β=0.345, p<0.01), and cost reduction strategies (β=0.298, p<0.05) significantly predicted profitability. The study concluded that effective cost management was essential for enhancing SME profitability in rural Uganda. Recommendations included implementing standard costing systems, conducting regular cost audits, training SME owners in cost accounting techniques, and establishing supplier negotiation frameworks to optimize cost structures.